BASF Profit Doubles, Spurring Better-Than-Estimated Dividend

BASF SE Chief Executive Officer Juergen Hambrecht
BASF SE Chief Executive Officer Juergen Hambrecht. Photographer: Hannelore Foerster/Bloomberg

BASF SE, the world’s biggest chemical company, said profit more than doubled as demand from the automotive industry expanded, spurring the company to propose a higher-than-estimated dividend.

Net income in the fourth quarter increased to 1.1 billion euros ($1.5 billion) from 455 million euros, Ludwigshafen, Germany-based BASF said. Analysts predicted 945 million euros. A dividend of 2.20 euros beat a Bloomberg forecast of 2.10 euros.

BASF had a “very strong start” to this year and predicted a further gain in sales and earnings in 2012, even as raw-material prices surge. Chief Executive Officer Juergen Hambrecht has made acquisitions to expand in personal-care chemicals and additives and plans to hire a further 2,900 workers this year.

“The outlook is pleasingly positive at this early stage of the year, and that’s the main piece of good news for the market,” said Lutz Grueten, an analyst at Commerzbank, which recommends clients “buy” the shares.

Though demand is rebounding, BASF faces margin pressure from input costs. The chemicals division will post higher sales, yet lower operating profit this year, it predicted. Still, management has a consistent track record of dealing with inflation, JPMorgan Cazenove analysts said in a note.

BASF rose 0.4 percent to 58.98 euros at 1:13 p.m. in Frankfurt, for a market value of 54.1 billion euros. It has fallen 1.3 percent this year, compared with a 5.5 percent advance at Dow Chemical Co. Any share weakness is an opportunity to invest, JPMorgan’s Neil Tyler and Martin Evans said.


A faster-than-expected economic recovery created some temporary delivery bottlenecks at BASF’s petrochemical division. Unscheduled plant shutdowns at competitors exacerbated the supply shortage, allowing the German company to pass on the higher raw-material costs through prices.

“Overall, we are optimistic for the first quarter and the year,” said Hambrecht, who will step down after eight years at the helm. Chief Financial Officer Kurt Bock will succeed him at the annual shareholders meeting on May 6.

BASF’s outlook mirrors upbeat comments from Dow Chemical, the biggest U.S. chemical maker. Its fourth-quarter profit beat estimates, and the company raised prices and predicted that earnings will continue increasing this year. DuPont Co. raised its 2011 profit forecast on Jan. 25.

BASF’s earnings from inorganic and intermediate chemicals will remain at last year’s levels, while sales in both businesses will rise slightly, the company said.

China Boost, Libya Concern

China’s passenger-car sales in 2010 rose 33 percent to 13.8 million vehicles, the country’s vehicle-manufacturers association said on Jan. 10. BASF got about one-quarter of sales last year directly or indirectly from automotive companies, according to estimates by Oliver Schwarz, an analyst at MM Warburg in Hamburg.

Earnings before interest, taxes, depreciation and amortization equal to 17.4 percent of sales, approached BASF’s 18 percent-target for 2012. Quarterly Ebit totaled 1.69 billion euros, short of predictions averaging 1.92 billion euros.

BASF, which purchased moisturizer-ingredient maker Cognis last year, expects a “slight increase” in sales in 2011, excluding acquisitions. Sales increased to 16.42 billion euros from 13.17 billion euros in the quarter. Operating cash flow climbed to a record 6.46 billion euros last year.

BASF’s Wintershall unit, the operator of eight oil fields in the Libyan desert, halted oil and gas production in the North African country as a revolt spreads to topple the regime of Muammar Qaddafi. BASF earned 70 million euros in profit in Libya last year and its assets are valued at about 600 million euros, board member Hans-Ulrich Engel said.

Hambrecht couldn’t specify when production will resume and called the spike in the price of oil, currently trading at a 30-month high, as “exaggerated.”

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